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Corporate Push for Law Firm Diversity Enters a New Phase
In the continuing tug of war over diversity, companies like Wal-Mart say law firms must meet benchmarks or risk being dropped
Daily Business Review
July 11, 2008
Wal-Mart, a leading corporate advocate of diversity in the legal profession, is deploying new software to keep a watchful eye on its law firms and make sure the attorneys working on its matters are diverse.
The world's largest retailer has developed new software to monitor the diversity of its outside counsel starting this fall, said Miguel Rivera, Wal-Mart's associate general counsel for outside counsel management.
Wal-Mart -- which includes Miami-based Greenberg Traurig in its stable of legal counsel -- will drop law firms that don't meet diversity benchmarks, he said.
Rivera spoke at The Florida Bar's diversity symposium last month on a panel of four in-house attorneys who discussed their commitment to diversity and the pressure they apply to outside law firms to become more diverse.
The software program "will allow us to measure the diversity of attorneys at your firm based on the hours billed, so the system can't be gamed," Rivera said. He could not be reached for further comment about the software. Company spokesman Lorenzo Lopez declined further comment.
Wal-Mart has been demanding more diversity among the relationship partners managing its work at law firms, and company leaders have taken work away from a handful of firms they didn't think fully embraced diversity.
The company works with 500 law firms on a regular basis and another 300 periodically.
"We severed relationships with four firms because we didn't think they had the commitment," Rivera told the audience. "We went through the process and moved $60 million of business from majority male to female and diverse relationship partners."
The new software is an example of the evolving approach taken by general counsel to ensure more minorities and more women are staffing their outside legal assignments.
Many companies are no longer willing to take firm leaders at their word when they profess a commitment to diversity. Instead they're insisting their outside law firms prove it.
Companies are focused on diversity inside and out. Rivera said Wal-Mart set about improving the diversity of its own attorneys five years ago. The firm employs 154 attorneys including 37 percent minorities and 43 percent women, he said.
Wal-Mart is taking a high-tech approach, but other companies also are taking a sharper look at the diversity of their outside counsel.
General counsel already accustomed to scrutinizing their bills are surveying firms about diversity, promotions and retention. Some are even questioning the diverse attorneys at law firms to find out how firm leaders treat them and whether they're receiving credit for their contributions.
"I go to court. I know who's on the case," said panelist Rose Schmidt, who serves as vice president and senior counsel for Marriott International.
These efforts indicate diversity is entering a new era in corporate America, legal insiders say.
"They're insisting firms not just use diversity to get the work, but firms must illustrate the involvement of diverse attorneys on their accounts," said Fort Lauderdale attorney Eugene Pettis. He is a member of The Florida Bar's board of governors; he moderated the diversity symposium.
Pettis said companies are no longer accepting "lip service to this critical issue."
Corporate counsel have taken a strong interest in whether law firms are staffing their assignments with minority attorneys and whether they're retaining and promoting them.
How far companies go to ensure diversity often depends on the internal philosophy of a company and the amount of money it can spend on the effort, said Steven Sibner, president of the South Florida chapter of the Association of Corporate Counsel. He is managing attorney for Boca Raton-based workers' compensation insurance database manager NCCI Holdings.
Most corporations want to improve diversity, but not all can afford to pursue it in the same way, he said. Moves by general counsel to ratchet up scrutiny of law firm billings is part of a larger effort. Companies are now more sharply exercising control in part because of the sagging economy.
"General counsel are accountable for the work their outside counsel do," Sibner said. "The economy is part of it."
It was four years ago that Roderick Palmore -- then-general counsel for food maker Sara Lee -- launched his effort to encourage other general counsel to commit to diversity. He is now in the same position at General Mills. He succeeded in getting 110 GCs to sign the Call to Action signifying their commitment to diversity.
Palmore organized a two-day, follow-up summit held in April in Scottsdale, Ariz., inviting those who signed the Call to Action as well as law firm managing partners, to discuss how much has been accomplished.
Francisco Gonzalez, a partner in Coral Gables-based Adorno & Yoss, said the Call to Action was a great initiative, but general counsel are now requiring more than a written or verbal commitment. He said companies find themselves under increasing pressure from their customers, employees, shareholders and boards of directors to improve diversity.
"Commitment to diversity is no longer enough," Gonzalez said. "Corporate America is being pressured to implement diversity programs themselves. It's good business practice; it's not just the right thing to do."
One group that has only recently been added to the diversity discussion is challenging to track, Marriott's Schmidt said. The company is interested in staffing its assignments with attorneys who are gay, lesbian, bisexual or transgender, as well as those with disabilities.
But Schmidt, who is openly gay, said "it has been a struggle" to get reliable numbers. "We know in many companies gay, lesbian, bisexual and transgender people aren't able to self-identify. We know they're inaccurate."
Gonzalez expects more companies to begin asking their law firms to report the number of openly GLBT attorneys they employ. But he said that will place firms in an uncomfortable position because the issue continues to be "touchy" with a don't ask-don't tell policy pervasive at many law firms. He noted attorneys can self-identify by aligning themselves with GLBT affinity groups.
If asked to report GLBT numbers, Gonzalez said Adorno & Yoss would count employees who are already open about their sexual orientation.
"If an attorney is open about it, we'll include it in the numbers," he said. "We're not going around asking people. That's none of our business."
Minority attorneys from several ethnic bar groups expressed concern during the symposium that companies aren't making it easier for minority lawyers to work with their companies -- particularly those at small minority-owned firms.
Kertch Conze, president of the Haitian Lawyers Association, said it remains a challenging task for minority attorneys in both small and large firms to create meaningful business relationships with attorneys in general counsel offices.
And minority-owned firms are often considered too small to handle work for large corporations, creating a Catch-22 that leaves them small players in a legal landscape dominated by large majority-owned firms, the minority bar leaders said at the symposium.
"If you're with a majority owned-firm, you're not good enough, and if you're in a minority firm, you're not good enough," Conze said.
The panelists acknowledged it can be difficult, particularly for minorities in small firms, to forge all-important business relationships. That's why it's important to carefully target companies as potential clients, patiently cultivate relationships with them and accept assignments no matter what their size.
"Identify your target very, very carefully," said Ramona Romero, corporate counsel and manager of law firm partnering for chemical giant DuPont. She said attorneys must find ways to stand out.
"It's not hard to get invited into the door," she said. "The question is, 'Is it worth your time?' "
